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Political Cycles in MGNREGs Implementation


  • K. Vinay

    (Officer, Citigroup, Chennai, India)

  • Brinda Viswanathan

    (Professor, Madras School of Economics)


Nordhaus (1975) is one of the earliest studies to provide a theoretical assessment of political business cycles, explaining opportunistic behaviour of political parties before the elections. This study is an attempt to find the nature of association between electoral incentives and the use of welfare policies in a federal democratic system through the lens of India‟s largest nationwide social security scheme, MGNREGS. Among the panel data random effects models, the Hausman-Taylor instrumental variable estimator is used for econometric modelling by leveraging data at a month on month level from April 2012 to June 2019 for twenty-two Indian states. The demand for work and person-days of work are considered for the analysis capturing respectively the demand and supply side variables of the program. After controlling for rainfall, rural population and landless agricultural labour, an asymmetric behaviour is observed for the states governed by regional parties such that they tend to generate significantly lower person-days of work near the central elections but show a significantly higher demand for work near the state elections. Moreover, states ruled by aligned central and state parties generate higher than average demand for work under the scheme. The over-arching framework of multi-party democracy and the dynamics of center-state relations present in centrally sponsored schemes create scope for such behaviour.

Suggested Citation

  • K. Vinay & Brinda Viswanathan, "undated". "Political Cycles in MGNREGs Implementation," Working Papers 2020-187, Madras School of Economics,Chennai,India.
  • Handle: RePEc:mad:wpaper:2020-187

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    References listed on IDEAS

    1. Arulampalam, Wiji & Dasgupta, Sugato & Dhillon, Amrita & Dutta, Bhaskar, 2009. "Electoral goals and center-state transfers: A theoretical model and empirical evidence from India," Journal of Development Economics, Elsevier, vol. 88(1), pages 103-119, January.
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    6. Andrew Healy & Gabriel S. Lenz, 2014. "Substituting the End for the Whole: Why Voters Respond Primarily to the Election‐Year Economy," American Journal of Political Science, John Wiley & Sons, vol. 58(1), pages 31-47, January.
    7. Ganesh Manjhi & Meeta Keswani Mehra, 2018. "Political Transfer Cycles from the Centre to the states," Revista ESPE - Ensayos sobre Política Económica, Banco de la Republica de Colombia, vol. 36(86), pages 207-241, June.
    8. Anubhab Pattanayak & K.S.Kavikumar, "undated". "Fiscal Transfers, Natural Calamities and Partisan Politics - Evidence from India," Working Papers 2019-184, Madras School of Economics,Chennai,India.
    9. Rajendran Narayanan & Sakina Dhorajiwala & Rajesh Golani, 2019. "Analysis of Payment Delays and Delay Compensation in MGNREGA: Findings Across Ten States for Financial Year 2016–2017," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 62(1), pages 113-133, March.
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    More about this item


    : elections; incumbent; MGNREGS; Hausman-Taylor IV regression;
    All these keywords.

    JEL classification:

    • C36 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Instrumental Variables (IV) Estimation
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies

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